Institutional Money Surges Again…Will the Cryptocurrency Market Exceed $2.23 Trillion?

▲ Cryptocurrency ©Go Da-sol

As institutional funds returned, the cryptocurrency market also moved again. With capital inflows into Bitcoin (BTC) spot ETFs, coupled with regulatory expectations and a short squeeze (buying pressure occurring to liquidate or cover short-selling positions), the total market capitalization rose by 0.55% in 24 hours, reaching $2.21 trillion.

According to the cryptocurrency market data aggregator CoinMarketCap on August 7 (local time), the key driver behind the cryptocurrency market's rebound was the influx of institutional funds through Bitcoin spot ETFs. On that day, $109 million flowed net into these ETFs, with BlackRock's iShares Bitcoin Trust leading the trend. BlackRock net bought Bitcoin for four consecutive trading days, bringing its cumulative net purchases for the week to $604 million.

The cryptocurrency market also showed an upward trend sharing macroeconomic factors, exhibiting a high correlation of 84% with gold. On the regulatory front, news that U.S. Senate Republican Whip John Thune plans to push for a vote on the U.S. cryptocurrency market structure bill, the Clarity Act, in September boosted investor sentiment. Expectations of easing regulatory uncertainty, combined with institutional buying, strengthened the overall market's upward foundation.

In the derivatives market, the average funding rate surged by 284% over 24 hours. This indicates that the upward trend was not solely driven by spot demand but was amplified by leveraged investors, who had bet on price declines, being forced to buy to close their positions. While regulatory expectations acted as a mid-to-long-term positive factor, a rapid short squeeze accelerated the short-term upward momentum.

The short-term watershed is the 23.6% Fibonacci resistance level formed at $2.23 trillion based on total market capitalization. If net inflows into Bitcoin spot ETFs continue and this level is decisively broken, the market capitalization could rise to $2.26 trillion. Conversely, if it falls from $2.23 trillion and even breaks below the 7-day Simple Moving Average (SMA) of $2.18 trillion, this rebound could be assessed as a temporary short squeeze rather than a trend reversal.

The market outlook leans towards cautious bullishness. While actual institutional buying supported prices, and regulatory progress and technical buying amplified the rise, the possibility of profit-taking near key resistance levels remains. The future direction depends on whether ETF net inflows continue and whether the market can convert $2.23 trillion into a support level, with the Clarity Act vote in September cited as the next major variable.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*